Wall Street, New York. Image source: Dave Center, flickr.com
Morgan Stanley's earnings report for the three months ending December 2021 kicked off the latest earnings season, beating Wall Street's forecasts. Even still, the stock market as a whole continues to be diving as investors' sentiment remains subdued. You can read more about that from our detailed analysis of the Nasdaq Composite index.
In the first major release this earnings season, Morgan Stanley's Q4 performance beat Wall Street's preliminary forecasts. The financial institution reported earnings per share (EPS) of $2.01 vs $1.91 expected. Revenue was at $14.52 billion, slightly below the expectations of $14.6 billion. Even so, the stock market as a whole continues to be shaken by growing selling pressure.
Stock Market 1D Comparison Chart. Image source: Trendsharks ©, created with TradingView.com
As can be seen on the daily chart above, the general stock market cycle appears to be entering the early stages of a new corrective period pertaining to financial stocks. This can be inferred by the fact that the initial coronavirus fallout that swept markets in early 2020 prompted the last major selloff.
This stage was followed by a period of tentative recovery ensued by the last rally. Over the last several months, however, as soaring inflation started becoming a major concern for investors, the stock market entered into a plateau near the peak of the rally.
It is precisely from this interim stage that the current correction appears to be emerging. Most financial stocks are losing ground, with JP Morgan registering the biggest slump. This is already being reflected on the S&P 500. Morgan Stanley, too, is faltering, even though its crunch has been comparatively smaller thus far.
James Gorman Reflects on an 'Outstanding' year
$MS 4Q 2021 earnings: Morgan Stanley reports fourth quarter 2021 net revenues of $14.5 billion, net income of $3.7 billion, EPS of $2.01 and ROTCE of 19.8%. Release: https://t.co/evTiUvGcWD pic.twitter.com/bdsmkBwCVR
— Morgan Stanley (@MorganStanley) January 19, 2022
James Gorman, Morgan Stanley's CEO, commented on the quarterly performance of the bank:
"2021 was an outstanding year for our Firm. We delivered record net revenues of $60 billion and a ROTCE of 20%, with stand-out results in each of our business segments. Wealth Management grew client assets by nearly $1 trillion to $4.9 trillion this year, with $438 billion in net new assets. Combined with Investment Management, we now have $6.5 trillion in client assets. Our integrated investment bank has continued to gain wallet share. We have a sustainable business model with scale, capital flexibility, momentum and growth."
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